5.1 The Likely Impacts of High Bandwidth Networks on the Turkish Economy
According to the National Broadband Vision Study of Turkey,*
through fostering broadband development the Turkish economy could gain US$ 4.9-10
billion extra value added each year thereby boosting its economic growth by 0.8-1.7
percentage points. This economic momentum enabled by an enhanced broadband ecosystem
would bring 180,000-380,000 new jobs and provide new income opportunities. This
implies that employment creation in new broadband-related activities would eventually
compensate for job loss due to process optimization and structural displacements.
Through help of a toolkit* the Broadband National Vision Study
reports to find a significant growth impact for the Turkish economy fueled by broadband
enhancing public policies. In the baseline growth scenario Turkish economy would
take off by an annual rate of 5.0 per cent as depicted in Figure 5‑1, and it would reach the US$ 1,216 billion GDP
level by the end of 2023.
Under the broadband enhancing growth scenario in which a set of active government
programs to boost broadband impact are introduced, the economic growth forecast
is much faster, with an additional 2.3 percentage points, reaching to 7.3% on annual
basis. Government policies targeting enhanced broadband infrastructure and ecosystem
will boost economic growth significantly. By 2023 the Turkish economy would have
a GDP at USD 1,652 billion rather than USD 1,216 billion of the baseline scenario.
This is a GDP level 36% greater than the baseline. It may accurately be called the
The broadband effect encompasses two distinctive categories: Industry benefits (measured
as USD 289 billion during 2010-2023) comprising of the overall broadband productivity
impacts within and beyond the ICT industry; and pillar effects (measured as USD
147 billion during 2010-2023) which might directly be associated with broadband
enhancing policies of the government. Since industry benefits are nearly two times
larger than pillar benefits for Turkish economy, broadband enhancing policies should
trigger a multiplier effect within the economy and their indirect impacts could
potentially outpace the direct effects.
The study also analyzes detailed impacts of enhanced broadband polices on different
economic sectors, the so called pillar effects. Pillar effects can be decomposed
into different sectors as follows:
- 7 per cent of total
pillar effects will come from revitalized small/medium business;
- 6 per cent contribution
will arrive from improved government services;
- 4 per cent to come
from the benefits of broadband-enabled education;
16 per cent to come from
a more attractive business environment;
- 67 per cent to come
from other sectors, as well as multi-factor productivity and the benefits of collaboration
across the economy.
Figure 5‑1 Base line and
broadband enhanced growth scenarios, Real GDP2009=100
Analyses indicate forecast benefits from increased ICT adoption by the SME sector
will be large and e-government applications would provide a significant amount of
contribution through cutting costs and improving productivity. Another important
policy area that should be focused is education. The main benefit seems to be improvements
in the general business
environment. Under the broadband enhanced scenario policies to foster the business
environment, 16 % of total pillar effects will come from improvements in the business
framework alone. The largest one is the multiplier effect. Broadband adoption will
bring benefits diffusing beyond the ICT sector through channels of multifactor productivity.
5.2 Factors Contributing to Turkey’s Broadband Development
E-government initiatives have been a major driving force for development of the
broadband ecosystem. Turkey has implemented a highly motivated e government program
that created the necessary demand for enterprises in the ICT sector and motivated
citizens for increased Internet usage. In this regard Turkey has demonstrated an
interesting example that countries with relatively lower level of Internet penetration
and usage ratios can exploit e-government programs as a means to ignite development
of the broadband ecosystem.
Ensuring a shared vision among political leaders and technocrats has also been an
important factor in pushing e-government programs. Since the coming of the new national
government into power in 2002, political leaders saw e-government as a central instrument
that would support public reforms and larger changes in the political system. A
central organizational structure was formulated to develop strategies and put public
money into the pipeline for a set of strategically important projects with high
value and a high transaction volume.
The EU candidacy of Turkey and the membership negotiation process has provided a
good opportunity for the country to reform its ICT and broadband legal and regulative
frameworks. This process helped bureaucrats and top-level managers get closer to
European institutions, policies and initiatives, and market developments in these
The high tempo growth of Turkish economy in the last decade is another factor supporting
in the Internet revolution. The new national government has implemented ambitious
market oriented reforms complemented with a proactive foreign policy which resulted
in large sums of overseas capital flowing into the country. Communications, software
and hardware segments of ICT industries have expanded rapidly.
Figure 5‑2 Turkey connectivity
performance by scorecard component, 2010
5.2.1 Lessons learned
The Connectivity Scorecard is a composite index to assess the relative development
level of ICTs (Figure
Turkey was found to have a robust consumer infrastructure due to its high mobile
and PSTN penetration and also the recent progress in broadband networks. It also
scores strong on consumer usage and skills metrics such as frequent Internet usage
and uptake of voice services. According to the Scorecard the country’s business
infrastructure is above average, with high penetration of secure Internet servers,
and substantial business investments in ICT. Turkey also impresses on government-related
metrics such as government spending on ICT and provision of government services
However the Scorecard points out that Turkey ranks somewhat poorly in business usage
and skills, where its score is considerably lower than one might expect given the
state of its business infrastructure. Turkey has made considerable progress in developing
a robust ICT infrastructure but its weaker usage and skills scores indicate that
the country is yet to fully realize its benefits. Therefore, it needs to place greater
effort on ensuring the adoption and diffusion of ICTs to leverage competitive power.
Turkey faces a strategic opportunity in terms of broadband infrastructure development.
The majority of the national broadband network is based on slower speed connections
which do not optimally support advanced applications of next generation connectivity
such as e-education, e-health, etc. There are signals suggesting the current broadband
network has become somewhat overloaded.
To enhance a rapid take up of high bandwidth broadband networks the government should
play a more effective and active role. First and foremost is ensuring effective
regulation. The public stake in the incumbent operator should not prevent authorities
from enforcing rules for fostering competition in the broadband market. Secondly,
Turkey should design a complete and integrated broadband strategy for coordinating
various individual pieces in the same direction.
To enable increased ICT and broadband adoption by businesses the government should
exercise greater efforts to design effective programs and incentives. In particular
skill gaps should be identified and adequately addressed with participation of private
The lack of a suitable national accounting framework for more detailed analysis
hinders international benchmarking in most emerging policy areas notably ICTs and
innovation. Turkey should take measures to address this problem and ensure reliable
and timely indicators are developed and made available to the public.